Nirmala Sitharaman Tells World Bank To Be Realistic On Private Capital Mobilisation

India's Finance Minister Nirmala Sitharaman asked the World Bank to be realistic about the potential of private capital mobilisation in the current global economic outlook.

The World Bank needs to look beyond balance sheet optimisation and consider other measures like the International Bank for Reconstruction and Development capital increase to meet its ambitions, she said while speaking at the 108th meeting of the Development Committee plenary in Marrakech, Morocco.

She urged that recommendations from the report of the G20 Independent Expert Group—formed under India's Presidency—on strengthening multilateral development banks be considered a priority.

The IBRD, along with the International Development Authority, are arms of the World Bank that lend to poorer nations, specific to their developmental objectives.

"...We are pleased to endorse the World Bank’s new vision, ‘to create a world free of poverty on a liveable planet’. We also support its new mission ‘to end extreme poverty and boost shared prosperity on a liveable planet’ by strengthening inclusion, resilience and sustainability," she said.

Sitharaman is on a six-day official visit to Marrakech to attend the World Bank-International Monetary Fund annual meet, along with the G20 Finance Ministers and Central Bank Governor's meeting.

This would mark the fourth and final FMCBG meeting, scheduled under India's G20 presidency, before Brazil assumes the position on Dec. 1.

As part of the G20 New Delhi Declaration, the leaders of the group countries committed to building 'better, bigger and more effective multilateral development banks,' to address global challenges. In this context, Sitharaman supported the World Bank's Evolution Roadmap, adding that it would set the template for the MDB ecosystem.

She said that more work would be needed beyond the Marrakech meeting to detail the implementation strategy to increase its operational and financial capacity to reach the objective of a bigger, better and more effective bank.

Some of the suggestions Sitharaman made included developing the World Bank Group's country engagement model in line with that country's national development priorities.

"...While engaging in climate action, in line with the principle of 'common but differentiated responsibilities and respective capabilities', we encourage the Bank to be more ambitious in its commitment to adaptation finance," she said.

Speaking on increasing the role of private finance mobilisation at scale, she said that it will also require a unified ‘One World Bank’ approach, where both ideating and enabling bodies function in tandem.

On raising domestic resources, Sitharaman suggested raising fiscal resources beyond taxation. "Analytical work through the new Public Finance Reviews should fully respect the country’s sovereignty over tax policy. Also, the approach to addressing illicit financial flows should cover points of origin, transit and destination," the minister said.

Sitharaman also said that the World Bank could look at increasing its resources through measures such as raising the International Development Association's contribution to address the needs of the poorest countries and considering a general capital increase for the bank's lending arm, the International Bank for Reconstruction and Development.

Other suggestions to the bank included simplifying and aligning processes and procedures across the Bank Group, delegating more authority to country offices, and involving more knowledge institutions of the Global South in the World Bank’s knowledge products and verticals.